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Punters to lose 20 per cent of betting wins to taxman

Punters be informed. In addition to the numerous losses you keep suffering from betting, when you win, 20 percent will be channelled to the taxman.

This is if as expected President Uhuru Kenyatta signs the Finance Bill 2018 that he returned to Parliament after proposing a reduction in the 16 per cent VAT on fuel to eight per cent. MPs had recommended a two-year suspension on the increase from zero to 16 per cent, but President Uhuru proposed a gradual implementation of the tax starting with eight per cent.

While proposing the reduction, the Preident acknowledged that the new fuel tax alone cannot enable the government to meet its financial obligations and therefore proposed several measures aimed at bringing in more income for the government, among them a 20 per cent taxation on gaming wins. Uhuru’s proposal was passed in a chaotic National Assembly vote yesterday.

To bring this to perspective, if you place a bet in any of the numerous platforms available and win say, Sh10,000, you will receive Sh8,000 with Sh2,000 being remitted to Kenya Revenue Authority (KRA) by the betting company as tax. This is a departure from the past where winnings were not subjected to any form of taxation. 

This is, however, not the first attempt by the government to tax betting and gaming winnings. In 2012, through the Finance Act, 2012, a 20 per cent withholding tax on winnings from betting and gaming was introduced but was deleted via a second Finance Act 2012 before it could take effect.

It was reintroduced through the Finance Act, 2013 as a final tax and took effect on January 1, 2014.

The Association of Gaming Operators filed a petition at the High Court contesting that the new Income Tax Act amendments enacted by the Finance Act, 2013 were unconstitutional as they were introduced without any public participation.

Nevertheless, in an attempt to address the implementation challenges, the government introduced further amendments to the Income Tax Act in 2015. Through the Finance Act, 2015, withholding tax was now applicable to the gross winnings payable by bookmakers to punters.

The withholding tax was also reduced from 20 per cent to 7.5 per cent, the change taking effect on January 1, 2016.

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